UT (Tax & Chancery) UT/2023/000087 - [2025] UKUT 00176 (TCC)

Appendix 1 of the FTT Decision set out facts that were agreed. The FTT also made further findings of fact in the body of its decision. There is no challenge to the FTT’s findings of fact and we can briefly set out the relevant facts.

The appellant is a cargo airline based at East Midlands Airport. It is part of the Deutsche Post DHL Group. The appellant was first granted an end-use authorisation for civil aircraft and parts on 8 March 2002; this expired on 7 March 2007. The appellant then applied for and was granted an end-use authorisation on 15 January 2008 with retroactive effect from the date of expiry of the previous authorisation. This authorisation was valid until 6 March 2010. The appellant applied for and was granted in February 2010 a further authorisation for the period 7 March 2010 to 6 March 2015. The authorisation specified the place of the end-use as being East Midlands Airport.

On 30 March 2015 the appellant made an application to renew its authorisation retroactively. That application was never decided by HMRC.

HMRC commenced a review of the appellant’s past operation of the end-use procedure. The review revealed irregularities and led to an assessment to customs duty which, following various reductions, was confirmed by HMRC in March 2016 at £154,280.91. The assessment related to end-use procedures for civil aircraft parts. The appellant appealed against the assessment but the appeal was withdrawn by the appellant in February 2017.

The FTT found at [115(3)] that it was clear from the circumstances that HMRC were not going to grant an authorisation pursuant to the 2015 Application in the light of the review which ultimately led to the customs duty debt of £154,280. Further, it was fully evident to the appellant that HMRC were not going to grant the authorisation. That is why the appellant did not chase HMRC for a decision and why it started to import aircraft parts with airworthiness certificates using tariff suspension rather than the favourable tariff treatment for end-use. The FTT concluded at [116]:

Between 14 June 2016 and 21 February 2017, the appellant imported seven Boeing 757 civil aircraft from the United States of America. At the time of the importation they were eligible to be imported with an appropriate end-use authorisation at a zero rate of duty by reason of their end-use as civil aircraft. The aircraft were in fact applied to the prescribed end-use. However they were incorrectly declared using the customs procedure code applicable to aircraft parts with airworthiness certificates.

The appellant made a retrospective application for end-use authorisation on 4 April 2017. This was the 2017 Application and it was in a standard form. Question 2 identified 8 “customs procedures” including “Aircraft and parts” which the appellant ticked. The FTT found at [25] that the appellant was seeking renewal of an existing authorisation which had expired on 6 March 2015, with the authorisation to last for five years until 5 March 2020. In answer to the question where will the goods be used, the appellant’s response was “Intra EU, Trans Continental (EU-USA & EU-BAH)”

The 2017 Application was refused on 10 July 2017. The refusal was upheld on a statutory review on 30 November 2017. The appellant appealed that decision on 22 December 2017.

HMRC subsequently issued a post-clearance demand notice for a customs debt of £3,010,108.52 and in due course the appellant appealed that decision. A request for a refund of the customs duty was also refused and that decision was also appealed.